Two shares of Citi will get you a one-way subway ticket off of Wall Street.

Two shares of Citi will get you a one-way subway ticket off of Wall Street. Another sharp downturn in equities meant another devastating turn for energy yesterday. All eyes on front crude today with non-farm payrolls and the ubiquitous ETF roll underway.


NATURAL GAS

A 102bcf draw was relatively in line with consensus and brings storage to 1,793bcf, roughly 218bcf over the 5-year average and about 300bcf more year over year. The draw did not seem to get in the way of producer hedging which reportedly came through in the backs - evident in the big futures trading for the day (140,627 futures contracts)
There is a sea of mild weather coming up in the next week which will result in a very bearish EIA report on March 19th; however, a cold wave is expected to hit the Northeast just in time for the all the St. Patty’s day revelers. Consequently, end of March storage has the strong potential to come in under 1700bcf lending support to NG before the next leg down


CRUDE & PRODUCTS

Diesel Side Note: food processing companies are increasingly anxious about hedging CAL10. Although there does not seem to be significant concern about price risk for the balance of 2009 we caution that there could be some price increase. For example, parts of South America are having a lackluster hydro year and will need to keep diesel on-hand for electric power generation. Yesterday PDVSA announced that spot market distillate exports will drop in Mar/Apr amid simultaneous outages at the Cardon and El Palito refineries. Jet fuel exports will be limited to 7 cargoes, 2 less than in Feb; no high-sulfur diesel cargoes will be available, from the typical 2. Exports of low-sulfur diesel from the Puerto La Cruz refinery are seen at the usual 4 cargoes. PDVSA closed a jet fuel tender in late-Feb for 4 spot market cargoes in March. Jet fuel and diesel cargoes go mostly to the US and European markets. Venezuela normally exports 2 spot market cargoes of high-sulfur sulfur diesel and 6 more through government agreements. PDVSA said the refinery maintenance had "no impact" on exports (Source: Energy News Today)

Consensus seems to be building among end users that 2010 will experience some economic turnaround. And, more importantly, the current low prices out the curve is an opportunity to lock in hedges for international truck fleets


ROLL INFORMATION

The schedules for major Index rolling of spot Crude Futures: (“days” refer to business days)

Rogers Index (RICI):2nd to last day of month prior; last day of month; first day of expiring month

DeutscheBank (DBC): 2nd thru 6th days of expiring month

US OIL Fund (USO): lasts 4 consecutive days, for monthly start dates click on http://www.unitedstatesoilfund.com/uso_rolldates.html (starts today for April09)

DJ-AIG (AIGCI): 5th thru 9th days of expiring month

Goldman Sachs (GSCI): 5th thru 9th days of expiring month

Ranie Hotis, CFA
HCEnergy